IMF cuts China 2015 growth forecast

The International Monetary Fund (IMF) has trimmed its growth forecast for the Chinese economy for 2015, saying it is now expected to expand at a pace of just 7.0 percent or lower, Financial Times reported.

The revision comes in the wake of concerns about a slowdown in the property market. The IMF had previously projected the world’s second biggest economy to grow by 7.3 percent next year.

A correction in China’s property sector is under way but the longer-term prospects for the industry remain good, IMF’s deputy managing director David Lipton was quoted as saying in Beijing Thursday.

“There has been some overheating and the inventory of unsold houses, unsold floorspace, the inventory of unoccupied dwellings has risen,” the official said.

“It may well be there is a cyclical period where there are adjustments from this overheating. But we know also from international experience that once corrections take place there can be a resumption.”

The IMF sees a steady build-up of debt, particularly by local governments and in the shadow banking sector, as the biggest risk to the economy.